Organic rice
from Cambodia
AMRU Rice plans to double its production
every year until 2020.
07
Exponential growth
Saran Song
Eva and Anshul
“I can’t wait” is a sentiment often
expressed by Saran Song. It is with
this same sense of urgency that the
founder of AMRU Rice is driving his
company to double its production of
organic rice annually.
After turning down a scholarship in
the USA, Saran Song completed an
MBA and founded an NGO. He then
realized he could have a major impact by setting up his own company.
This is his success story.
“Without responsAbility I wouldn’t
be able to sustain such a fast pace,”
says Saran Song. Essential impetus is
provided by Anshul Jindal (Senior Investment Officer) and Eva Tschannen
(Technical Assistance).
responsAbility Investments AG / AMRU Rice Case – Cambodia
responsAbility Investments AG
AMRU Rice Case – Cambodia
“Without the
support of
responsAbility
I wouldn’t be
able to keep up
the fast pace.”
Saran Song
“We want to help Saran Song
maintain his pace and at the
same time keep him in check.”
Anshul Jindal
2
Rice – the white gold
of Cambodia
In Cambodia, the average person eats 150 kilograms of rice per
year. In this country where rice is also known as ‘white gold’,
the booming export trade heralds the beginning of a new era
for farmers.
Bhutan
Bangladesh
Have you already eaten? If rice was not on the menu,
Cambodians answer this question with “No”. A meal without rice is simply not a meal. In Cambodia, many families
grow the rice they eat on land that they inherited from
their ancestors. Any surplus rice is sold at local markets,
providing an important supplement to their income.
India
Since then, production of this traditional food product
has blossomed. Rice farmers are organising cooperatives
and are producing more professionally and effectively.
Fair trade and organic rice – which is what the company
AMRU Rice specialises in – is meeting with high demand
in Europe and the USA.
Cambodia is an agricultural country. Over 50 percent
Low income, solid growth and King Norodom
of the population works in rice production. 9.2 millionChina
Sihamoni as a stabilising force
tonnes of rice were harvested in 2015, putting this
important grain at the top of the country’s produce list.
But how does Cambodia currently stand as a country? In
This is followed by manioc, and to a far lesser extent corn. 2015, the average annual income of 1,020 dollars was
A few Myanmar
years ago, the first producers began exporting rice.
considerably more than it was ten years ago, but it is still
Laos
Thailand
Cambodia
Vietnam
merely an eighth of the worldwide
average. This is partly the result of
the guerrilla war waged by the Khmer
Rouge, which continued up until the
end of the twentieth century. Today,
with a parliamentary democracy
and King Norodom Sihamoni as the
elected monarch, there is enough
stability that the country is free from
political crisis and is considered a
safe travel destination.
si
lay
Ma
a
Producing rice in a more professional
way and for export represents a major
opportunity for Cambodia. However,
to continue this success, more funding is needed. Key factors requiring
investment include warehouses in
the growing regions, improvements in
production efficiency and training for
farmers.
3
responsAbility Investments AG
AMRU Rice Case – Cambodia
AMRU Rice doubles
production annually
Saran Song produces organic rice in Cambodia for export. His
business idea has been a resounding success and the company
AMRU Rice is going from strength to strength. Since its foundation in 2011, the company’s output of fair trade organic rice has
doubled every year.
Investments in new production facilities? “I can’t wait!”
Training for additional contract farmers? “I can’t wait!”
Negotiations with potential key customers in Europe?
“I can’t wait!” This phrase is uttered frequently by Saran
Song. His company AMRU Rice is growing at a phenomenal rate – not just continuously, but exponentially. Each
year, the company doubles the amount of organic rice
it produces, surprising even Song himself. “We didn’t
expect such huge growth when we started the company,”
he says. But now he wants to sustain this pace until 2020
– making time a precious commodity.
4
Seeds, training and work
Having previously worked for NGOs, Saran Song founded
AMRU Rice on 9 February 2011, which happened to
coincide with his 30th birthday. He focused the company’s activities on exporting Cambodian rice and in
2012 he was only able to trade rice. 2013 saw the first
harvest of his contract farmers, who produce rice for
him exclusively. Today the organic rice that is grown by
these farmers before being processed and fairly traded by
AMRU Rice is the company’s main business.
Song founded AMRU Rice with the aim of improving the
lives of the economically disadvantaged rice farmers in
the north of the country. He exports organic rice, which
is more lucrative thanks to the bigger margins. In return,
he pays the farmers far more than they had previously
received for their harvest. One of the conditions for this
is organic certification. As the contract farmers who now
work for AMRU Rice had never used pesticides or GMOs,
they were in an excellent position to fulfil the requirements right from the start. When AMRU Rice approached
the farmers to suggest tapping the opportunities offered
by the organic rice market, their soil was already in a
healthy organic condition and free from chemical residues.
_Above
Saran Song, founder of AMRU Rice.
_Centre
Factory workers at the biggest
production facility in Kampong Thom.
_Below
A production worker monitoring the
machines.
The know-how required for organic certification is taught
to the farmers by AMRU Rice and the Technical Assistance unit of responsAbility. Healthy soil, high-quality
seeds and capable farmers form the basis for the success
of AMRU Rice.
Immediately improving farmers’ lives
Saran Song’s business idea has been met with
great enthusiasm – particularly among the farmers.
“For a tonne of rice, we pay 350 instead of the usual
200 US dollars – that’s almost double their income.”
Song is especially proud of this. The farmers also profit
straight away. “They get more money for the next harvest,
rather than in three or five years’ time. We are improving
the lives of our contract farmers now, not just at some
point in the future. I can’t wait!”
“We are improving the
lives of our contract
farmers now, not just at
some point in the future.”
Saran Song
Customers are also enthusiastic about AMRU Rice
and Saran Song acquires the majority of his customers
through personal contact. He knows the European markets inside out and travels frequently – often together with
his wife Muny Khy, who supports him in her role as the
company’s Managing Director. Every year, the demand
for organic rice in Europe covers the amount of rice
produced by AMRU Rice right down to the last grain –
despite the company’s rapid growth. In fact, the situation
5
responsAbility Investments AG
AMRU Rice Case – Cambodia
AMRU Rice – Facts & Figures
2013
2016
2020
Personnel
approx. 90
approx. 200
approx. 350
Farmers
100
2,500
10,000
Cooperatives
2
18
35
Organic rice sold (metric tonnes)
100
11,000
30,000
MISSION
Sourcing, processing and mainly exporting rice that is organic and / or sustainably
produced according to international
certification standards. Amru Rice is also
engaged in the production phase by educating and financially securing farmers.
The figures in this table are courtesy of AMRU Rice
is about demand exceeding supply, customers put pressure on Saran Song because they want to buy more than
he can currently supply.
Having to wait is something Song finds incredibly frustrating. Although AMRU Rice has been doubling its production every year, demand is growing at an even faster rate
and AMRU Rice is struggling to keep up because of its
limited capacities. Between 2017 and 2019, Saran Song
will be investing 5 million US dollars in building mass
storage for organic rice as well as drying, milling and
processing facilities near the farms.
The entrepreneur recently expanded his portfolio and
opened a separate factory to produce products such as
rice noodles and rice paper. For these product segments,
he can also buy rice from farmers who do not meet or
have not yet achieved the premium standards for organic
rice. Around 10 percent of the rice produced by AMRU
Rice is consumed in Cambodia – although it is not certified as organic, the quality is still very high thanks to the
healthy soil which is untouched by pesticides.
Saran Song started off small and has set his sights high,
as shown by the company’s figures, all of which he can
fire off from memory (see table). The industry also holds
him in high regard and has presented various awards to
AMRU Rice. Two accolades merit particular mention: the
Young Entrepreneurship Award of the Takeda Foundation
(University of Tokyo), which he received in the category
“Outstanding Project For Social Change in February
2016”, and the gold medal for the “Best White Rice 2015
in Cambodia”.
Keeping up the pace with responsAbility
Saran Song can spot opportunities from a mile away
and knows how to use them. responsAbility supports
him by arranging export financing and working capital.
The Technical Assistance unit also sends external experts
to train the contract farmers so they can obtain organic
certification. “Without this support I wouldn’t be able to
keep up the fast pace,” says Saran Song. But going slow
is simply not his style. “I can’t wait!”
Scenes from the production facility of
AMRU Rice.
6
From seed to export:
How rice is produced at AMRU Rice.
Supplying the seed
1
200 – 250 tonnes is the amount of seeds
needed by AMRU’s contract partners each year.
20 – 100 tonnes are supplied by AMRU itself;
the rest comes from other sources.
2
Preparing the fields
Everything has to meet certification
requirements. AMRU considers it vital for
contract farmers to have training. This is
mainly organised by responsAbility.
Cultivating the rice plants
3
Weeding, fertilizing, removing pests and
irrigating. The process from sowing to harvesting
takes 5 to 6 months.
4
Harvesting
The harvest in November and December takes
two, or at most three, weeks. This presents the
farmers with a major organisational challenge.
Drying
5
The grains of rice are dried in the sun for 2 days
and are then transported to AMRU’s regional
warehouse, which is run by a large cooperative.
6
Removing residual moisture
After the rice has been transported to
the rice mill operated by AMRU’s subsidiary
Agro Angkor, any residual moisture is removed.
Storage
7
The dried rice is stored in the silos until it is time
for processing.
8
Refining
In the Agro Angkor rice mill, the rice is
separated according to type and quality and
then processed.
Transportation
9
The refined and cleaned rice is transported
to AMRU’s production facility in the village
Tropaing Por outside Phnom Penh.
10
CO2 treatment
Before the rice is distributed, any pests are
removed. Suppliers without organic certification
tend to use pesticides, but AMRU uses a gentle
CO2 treatment.
Export
11
50 kg bags of AMRU’s organic rice are
loaded into containers and transported to the
destination countries.
7
responsAbility Investments AG
AMRU Rice Case – Cambodia
Back to his roots
An inclusive rice business – by combining his interests to form
the company AMRU Rice, Saran Song has become a successful
businessman.
With an MBA already under his belt, Saran Song is currently working on his doctorate. However, the enterprising
Cambodian did not grow up surrounded by libraries but
in the midst of paddy fields. His grandfather started a
rice mill in the 1960s and had a rice plantation covering
2,000 hectares – the equivalent to around 2,800 football
fields. After Saran’s mother subsequently took over the
reins, it is now Saran’s sister who runs the business and
continues to produce for the local market.
Saran Song (1981) was never particularly interested in his
family’s low-income business. After completing his BBA in
Management at the National University in Phnom Penh,
he worked as an English teacher, sold language courses
and got involved with the local NGO Save the Children
of Cambodia. He was also periodically employed by the
Student Association of the United Nations. In 2005, he
turned down a scholarship in the USA – “I saw better
opportunities for myself in Cambodia”. He then managed
the Cambodian operations of the aid organisation Terre
des Hommes (Germany) for two years.
In 2008, he set up his own aid organisation dedicated to
protecting human rights and preventing rape and human
trafficking. He managed to raise 500,000 US dollars
per year from sponsors in the Netherlands and Hong
Kong. “But I wanted to achieve more, particularly for
the farmers”, says Saran. “It was around this time that a
government advisor told me that Cambodia should start
exporting rice.”
When Saran Song founded Amru Rice in 2012 he
returned back to his roots. By combining inclusive
business and rice and bringing together family members
in the company, he has become a successful entrepreneur. Muny Khy, his wife and mother of their two young
children, also happens to be the General Manager of
AMRU Rice. In addition to being an entrepreneur, Song
is enrolled on the Doctor of Business Administration programme with the Minnesota-based Walden University and
is completing his studies on a largely distance-learning
basis. His specialization is in Social Impact Management
and he is currently writing his doctoral study.
Saran Song with his wife Muny Khy.
He is the Chairman of AMRU Rice and
she is the Managing Director.
8
Phnom Penh’s growing
middle class
_Above
Phnom Penh is prospering, leading to
a boom in construction.
_Centre left
A hair salon in the commune of
Srah Chak in Phnom Penh.
_Centre right
Students from Phnom Penh on their
way to celebrate their graduation.
_Below
Silk of the finest quality is woven by
hand in Cambodia.
9
responsAbility Investments AG
AMRU Rice Case – Cambodia
“To maintain this fast pace,
Saran will need the support of
buyers, growers, the government
and investors like us.”
How do you help AMRU Rice to develop?
Six questions for Anshul Jindal, Senior Investment Officer at responsAbility.
Anshul, what do you like about your
job?
For 10 years I’ve been able to
contribute to a sector that I love and
know very well: agriculture. It’s a
very dynamic sector worldwide and
in Asia it plays a key role. However,
despite its huge economic importance, it is still highly underdeveloped
in Cambodia. A great deal can be
achieved with good investments.
Why are you investing in Saran Song
and his company AMRU Rice?
It is one of the best managed companies in the sector. AMRU Rice is supported by international certification,
exemplary corporate governance and
a very enterprising CEO who takes a
long-term perspective.
Saran Song drives his business at a
fast pace.
Amru Rice is growing at a tremendous speed. Over the last three
years, we’ve watched how things
have continuously developed in the
company, including its corporate governance, customer relations and the
10
relationship with its contract farmers.
The rice business needs someone
who treats both the growers and buyers fairly and correctly. This person
must be able to recognise the current
and future needs of the market and
understand what the Cambodian
rice sector has to offer. Saran is that
person.
What’s next for AMRU rice?
Saran plans to maintain this fast pace
over the coming years and he is very
capable of doing so. To achieve this,
he will need the support of buyers,
growers, the government and investors like us.
Is financing Amru Rice a safe
investment?
It is a sound investment, but there
are always some inherent risks
involved with agriculture. The recent
El Nino weather phenomenon is a
good example. What’s important
for us is how a company deals with
these situations. Someone who leads
a company through difficult times will
get back on track more quickly and
continue to grow. We don’t pull out as
soon as things get difficult, especially
not with a company that is as professionally and sustainably structured as
Amru Rice.
How will you help this customer to
develop?
We want to help Saran maintain his
pace and at the same time keep
him in check. In Cambodia there
are not many good entrepreneurs
at the moment. Saran is one of the
best and there are a lot of investors
interested in working with him. It is
important that we remain in dialogue
and ensure that the company’s development remains disciplined and is
driven by realistic goals.
A flourishing rice
cooperative
New know-how, more productivity, higher incomes and a guaranteed purchase agreement. Producing organic rice for AMRU Rice
is improving the quality of life for rice farmers and their families.
We arrive at the Samakee Rohas
Meanchey Cooperative in the heart
of Cambodia. Located in Kampong
Thom, approximately 300 kilometres
from the capital of Phnom Penh,
104 rice farmers have joined forces
to form the cooperative. They have
been producing organic rice for
AMRU Rice since 2014.
The Samakee Rohas Meanchey
Cooperative is one of 18 cooperatives
(as at the end of 2016) that supply
AMRU Rice. “We earn approximately
20 percent more than when we were
producing standard quality rice for
ourselves and the local market,” the
farmers say after a short discussion
among themselves. Later, back in
Pnomh Penh, Saran Song, Chairman
of AMRU Rice, says that most farmers get around 75 percent more in
the first year that they work with his
company. This increase depends on
several variables.
In Kampong Thom, where the cooperative operates as a self-managed
entity, at least ten members of the
management team come to greet us
upon our arrival. Among them are
Quality Inspector Poy Sovath, Auditor
San Sophal and Treasurer Louk Kimseang. Heng Sopheap is the President. Every year she renegotiates the
prices on behalf of the farmers and
agrees the contracts. As her main
occupation is also rice farming, this
management position is a second job
for her.
In addition to higher prices, the
farmers of the Samakee Rohas
Meanchey Cooperative are interested in a deal with AMRU Rice
because of the guarantee that it will
buy their rice. This form of income
security is entirely new to them. All
farmers undergo intensive training
that qualifies them to produce
premium organic rice. It is currently
the only quality of rice that AMRU
Rice purchases from the farmers in
Kampong Thom. However, that could
soon change because AMRU Rice
is starting to produce rice paper and
rice noodles for the local market,
providing an opportunity for the farmers to sell slightly lower grade rice at
good prices.
11
responsAbility Investments AG
AMRU Rice Case – Cambodia
So how are the farmers using the
extra money that they are earning
thanks to being able to sell certified
rice and the deal with AMRU Rice?
The answers we receive from the
Samakee Rohas Meanchey Cooperative are as different as the farmers
themselves. Some invest in increasing their productivity and buy tools or
machines for the field work, others
purchase a small tractor. For many of
them, the higher income means that
they are able to send their children to
university to do a bachelor’s degree
instead of sending them to work in
the field as soon as they finish high
school.
_Left
Rice farmers driving to their field.
_Below
Many farmers live in the midst
of their fields.
AMRU Rice and responsAbility work together
to support the rice farmers
Producing organic rice means more work for the farmers,
for example gathering pests by hand instead of using
pesticides. In the training programmes, the farmers learn
to produce their own organic fertiliser and how to use it
properly. AMRU Rice – with the financial and logistical
support of responsAbility’s Technical Assistance unit –
strengthens the farmers by providing the training required
for organic certification, giving them a new sense of professional pride and better financial prospects. AMRU Rice
also supports its suppliers financially. “In the first year,
we provide free seedlings for farmers in a poor financial
situation,” says Song Saran, Managing Director of AMRU.
“In the second year, they pay for 50 percent of the seedlings themselves with their earnings from the first year
and in the third year they carry the costs themselves.”
Inspectors – both from the cooperative and the organic
label – regularly check that the farmers are working in
compliance with organic production requirements. The
inspections range from correct preparation of the land
through to the quality of the seeds and the proper use of
natural fertiliser.
12
Rice farmers earn
15 to 75 percent more
when they produce for
AMRU Rice.
The rice is harvested in December. For many of the farmers there is then nothing left to do in the fields until the
beginning of the hot and wet season starting in June. In
Cambodia around only ten percent of the rice fields can
be permanently irrigated. The majority of the fields are
only farmed during the rainy season in the second half of
the year; during the rest of the year the fields are simply
left to rest. The farmers instead turn to their gardens to
grow vegetables for the local market or supplement their
incomes by keeping pigs or chickens. Some get through
the dry spell by taking a job at one of the numerous local
cashew farms. According to the farmers at the Samakee
Rohas Meanchey Cooperative, rice production accounts
for about 80 percent of a rice farmer's annual income.
Heng Sopheap, the president of the
Samakee Rohas Meanchey Cooperative, negotiated a three-year framework agreement with AMRU Rice in
2014. This has made the cooperative more attractive for farmers in
the area (4 villages, 234 families).
Currently 104 farmers belong to the
cooperative. In 2016, approximately
250 tonnes of rice were supplied
to AMRU Rice, earning around
26,500 US dollars – approximately
5,000 dollars more than they would
have earned with their standard
quality rice at the local market.
Heng Sopheap foresees additional
growth. Firstly, some of the farmers
still have reserves of land and thanks
to higher productivity they can afford
to grow rice on it in future. Secondly,
a growing number of farmers in the
area are interested in doing more
than just producing enough rice to
sustain themselves and their families.
_Above
The busy rattling
of machines can
be heard at the
Samakee Rohas
Meanchey Cooperative.
_Left
Heng Sopheap,
President of the
cooperative
13
Technical Assistance creates a
win-win situation for everyone
responsAbility
Technical
Assistance
Manager
Investment
Manager
Inv
me
nt
Re
De
pa
ing request
fin
ym
e
en
t
pro s tail
vid ore
es d s
co- up
fin por
an
t
Re
cin and
po
g
rts
on
pro
gre
ss
Approves fund
Requests fund
ing to supp
AMRU Rice
and reports on ort
progress
est
AMRU Rice
Cambodian rice processing /
trading group
Technical
Assistance
Donor
rts
pe
x
se
y
d
n
sa
pa
e
g
na
a
M
n
to
or
p
Re
ss
re
og
pr
Additional stable
income
Increased supply
of certified rice
Experts
Pr
ov
id
bu e tra
ild
i
ca ning
pa
cit and
y
Rice farmers
14
“Over the next three years,
up to 2,500 farmers will
receive certification.”
How do you assist the farmers who work for AMRU Rice?
Five key questions answered by Eva Tschannen, Head Technical Assistance at responsAbility.
What is the “Technical Assistance”
that you offer?
As part of the research and advisory
department of responsAbility, the
Technical Assistance unit is a team
of two professionals that manage tailored Technical Assistance projects.
We engage with the selected companies by providing Technical Assistance support on how to improve
their operational systems or by hiring
experts for social or environmental
aspects to improve the companies’
development impact.
Who finances you?
The project with AMRU is cofinanced by the Swiss Development
Cooperation (SDC). In cooperation
with this donor, we have defined
a framework which enables us to
support small and medium-sized
enterprises that have an impact
on development and employment.
These companies provide access
to profitable markets for significant
sections of the local population in
developing countries.
How does the provision of technical
assistance help the farmers who
supply AMRU Rice?
AMRU Rice has identified certified
organic rice as a niche market within
a profitable and highly competitive
international market environment.
To enable the business to meet the
quantity and standards that buyers
require for certified organic rice, the
company has to expand the network
of small farmers from which it can
source the rice. However, in order to
tap this market potential, AMRU first
needs to arrange certification for the
farmers, which can only be obtained
through training programmes. The
farmers learn about organic agriculture practices, gain access to
high-quality seedlings and learn how
to naturally increase their yields.
Without co-financing of the costs for
such training, AMRU would not be
able to source sufficient quantities of
certified rice and many farmers could
not benefit from premium payments.
We are able to create a win-winwin situation through the advisory
support provided by our external
consultants.
What positive impact does your work
have?
Over the next three years, up to
2,500 farmers will receive certification, enabling them to achieve a better
level of income. In addition, AMRU
aims to invest in local infrastructure,
which will further help to improve local
value creation by optimising the entire
supply chain, for example proper
treatment and storage of the rice after
harvesting and transport. Jobs for
qualified people will also be created in
these areas.
How do you make sure that your
efforts yield the greatest possible
effects?
We go through a competitive selection
process to identify the most suitable
consultants to provide the knowledge
that is needed by the companies
which we are supporting. However,
this knowledge and advice is only
effective if it is actually implemented
by the companies. We therefore
closely monitor the implementation
process and regularly confirm the
achievement of certain targets.
15
OUR OFFICES
ZURICH (HEAD OFFICE)
MUMBAI
LIMA
GENEVA
NAIROBI
BANGKOK
PARIS
LUXEMBOURG
HONG KONG
OSLO
WWW.RESPONSABILITY.COM